Chapter 4

Marketing on the Web

Learning Objectives

• Product vrs Consumer based marketing• Different market segments and how to

approach them• Consumer relationship intensity• Consumer relationship life cycle• Advertising on the web• E-mail marketing• Consumer Relationship Management• Branding

2

Marketing Mix

• Elements responsible for

– Selling– Promoting

– Of

– Products– Services

• Once the mix is decided, its called the marketing strategy

3

4

The Product

• No just physical product but also

– Manufacturing– Packaging– Naming– After sales– Warranties– Servicing

5

The Promotion

• All types of communication– Retailers, distributers, communication, purchase,

end user

• Extremely complex area– Promoters have to chose between

• Several TV Channels• Various Radio Stations• Hundreds of newspapers and magazines• Millions of websites• Books• Cinemas• Video Games• Posters

6

The Promotion Mix

• Direct Marketing– Involves direct communication Eg telephone, mail, etc

• Sponsorships– Pay others often an NGO in return of positive PR– Helps raise awareness and position the brand

• Public Relations– Creates mutual understanding between organisations and its

stakeholders

• Personal Selling– Direct face-to-face contact Eg in a shop

• Advertising– Used mainly to build brand and raise awareness

• Sales Promotions– Short-term incentives– Effective against competitors

7

The Price

• How much should we charge?

• Some consumers purchase only on price• Others judge quality• High price = High quality• Price also effects demand• What about commissions to intermediaries?

8

Price Elasticity

9

The Place

• How to move goods from the producer to the consumer

• Most goods are sold through intermediaries

• Thus the training of retail staff is very important

10

Adding some more Ps?

• People– The staff that offer the service– Everyone has to work in line to the marketing

strategy

• Processes– Must be in place to support the marketing– Eg Recipes in a restaurant, are they always

followed? What about quality of the meal?

• Physical Evidence– Ambience and design of surrounding

11

12

Exercise: Write down the 4 Ps of Vodafone UK

Case Study: Vodafone’s Marketing Mix

• Product

• A product with many different features provides customers with opportunities to chat, play games, send and receive pictures, change ring tones, receive information about travel and sporting events, obtain billing information, view video clips and send video messages.

• Vodafone live! provides on-the-move information services.

13

Case Study: Vodafone’s Marketing Mix

• Place

• Vodafone UK operates over 300 of its own stores.• It also sells through independent retailers e.g.

Carphone Warehouse.• Customers are able to see and handle products they

are considering buying.• People are on hand to ensure customers' needs are

matched with the right product and to explain the different options available.

14

Case Study: Vodafone’s Marketing Mix• Price

• Vodafone wants to make its services accessible to as many people as possible: from the young, through apprentices and high powered business executives, to the more mature users.

• It offers various pricing structures to suit different customer groups.

• Monthly price plans are available as well as prepay options. Phone users can top up their phone on line.

• Vodafone UK gives reward points for every £1 spent on calls, text messages, picture messages and ring tones.

15

Case Study: Vodafone’s Marketing Mix• Promotion

• Vodafone works with icons such as David Beckham to communicate its brand values.

• Advertising on TV, on billboards, in magazines and in other media outlets reaches large audiences and spreads the brand image and the message very effectively.

• Stores have special offers, promotions and point of sale posters to attract those inside the stores to buy.

• Vodafone's stores, its products and its staff all project the brand image.• Vodafone actively develops good public relations by sending press releases to

national newspapers and magazines to explain new products and ideas.

16

Different marketing strategies

• Media selection is especially important for online firms

• The web offers many advantages– Personal contact selling– Cost savings

• Best model– Trust-based model of personal contact when selling

on the web rather than mass marketing

17

Changing Times

• Rising consumer expectations• Reduced product differentiation• Increasing competition• Splintering of mass markets

• Resulting in ...– Reduction in the effectiveness of mass media– Internet took over providing consumer-focused

marketing strategies

18

Market Segmentation

19

Market Segmentation

• Identify specific portions of the market• Target them with specific advertising• Divides potential customers into segments

such as– Age– Gender– Marital status– Income level– Geographic location

20

Micromarketing

• Precise

• Focused on niche markets

• Typically very small market segments

21

Geographic Segmentation

• Divides groups by location

22

Demographic Segmentation

• Make use of age, gender, family size, income, education, religion, ethnicity

23

Psychographic Segmentation

• Use social class, personality, approach to life

24

Market segmentation on the Web:

Steve Madden

25

Market segmentation on the Web:Talbots

26

Steve Madden Vs. Talbots

• Both– Well designed– Functional

• Steve Madden– Young– Fashion conscious buyers– Make high fashion exciting

• Talbots– More conservative– Older established buyers– Emphasises stability, home life

27

Offering choice : Dell

28

Offering more choice: Dell

29

Segmentation using customer behaviour

• Create experiences based upon behaviour

• If it is related to an event or time it is called occasional segmentation

• If it is related to how they use the site, it is called usage-based segmentation

30

Occasional segmentation

31

Usage based segmentation 1

32

Usage based segmentation 2

33

Consumer relationship

• Strengthened through marketing

• Good consumer experience will result in loyalty towards the company and its products/services

34

5 stage model of consumer loyalty

• Awareness– Customers recognise name/brand/products of company

• Exploration– Customers learn more about the company/products

• Familiarity– Customers completed several transactions and are aware of

policies, pricing, flexibility, etc

• Commitment– After a number of successful transactions, customers develop

a strong preference

• Separation– Over time the relationship might change, customer might be

disappointed

35

5 stage model of consumer loyalty

36

Acquisition, Conversion and Retention

• Acquisition depends on the revenue model utilised

– Advertising support• Aims to keep customers in the site as much as possible• Show them as many adverts as possible

– Catalogue model, Fee for service or Subscription based

• Attracting customers is just an initial step• The cost to attract just one visitor is the acquisition cost• Second step to convert the visitor to the customer is the

conversion cost37

The funnel model

38

Types of Web Advertisement (1)

1) Banner Ads In the early stages of Internet,

"advertising" on the Internet meant "banner ads"

2) Pop-up and Pop under Ads

A pop-up ad is an ad that "pops up" in its own window when you go to a page.

Types of Web Advertisement (2)

3) Floating Ads These are ads that appear

when you first go to a Web page, and they "float" or "fly" over the page for anywhere from five to 30 seconds.

4) Unicast ads are TV commercial that runs in a pop-up window. It is animated and it has sound. The ads can last anywhere from 10 to 30 seconds.

Types of Web Advertisement (3)

5) Streaming Sidebar Ads A small video ad appears in the right

sidebar on this CNN page, with sound, and plays for 30 seconds. The reader can control the ad with the three buttons (Play, Pause, Stop) underneath the ad.

6) Pull Down Banner Ads Their operation varies depending on the

site. On some, when you mouse over the banner ad, it expands to fill much of the page. On others, the banner ad is expanded-size initially, then shrinks to normal size after several seconds.

From: http://www.howstuffworks.com

Banner Ads

• Use banner exchange networks• Find related websites• Use banner advertising network• Costs are normally a dollar per thousand

people (Cost per mille OR CPM)• Type of ads

– Pop-up vs. Pop-behind or under– Interstitial ad (displayed before the content)– Rich media ads or Active ads (floating on same

page)

42

Site sponsorship

• Allow advertisers to sponsor parts or all of their site in a more subtle way

• Sport Site? Or are they selling water?

43

Effectiveness of online ads

• Difficult to measure• No standard• A few rating companies are being considered

– ComScore– NetRatings

44

E-mail and Permission marketing

• Companies should obtain approval before sending promotion

• Some of them use automated email messages– Extremely cheap (less than 1c)

• Purchase of target email addresses cost between 1c and 1$

• Conversion rates are high – 10 to 30 %

• Banner click through are just 0.5%

45

Better email

• Not just spam but combine something useful– Article– Coupon– News

• To help out, several companies offer email management– Cost between 1 and 2 c per valid email– Take care of email campaigns

46

Branding

• Your brand is a vision, brought to life in each channel and at every touch point where your organization engages its audiences

• Audiences can include customers, employees, prospects, vendors or any person your organization touches

47

What is a brand?

“A brand is a distinguishing name or symbol intended to identify goods or services of a seller and to differentiate those goods or services from competitors.”

Clyde C. Tuggle

Coca-Cola, Senior Vice President

Worldwide Public Affairs & Communications

48

Purpose

• Inspire– Inject your organization with heart and soul

• Motivate– Spur action

• Connect– Unify departments and divisions for “global” presence. Link

products and services to a “promise.”

• Simplify– Clarify and crystallize your mission

• Inform– Convey values, attributes, and advantages

49

Product Vs. Brand

• Diet Coke vs. Diet Pepsi in Blind Taste Test– Prefer Pepsi Sample 51%– Prefer Coke 47%– No preference 2%

• Diet Coke vs. Diet Pepsi in Identified Taste Test (brand names revealed)– Prefer Pepsi Sample 23%– Prefer Coke 65%– No Preference 12%

50

Elements of Branding

• Product differentiation– How is it different from other products?

• Relevance– How useful is the product to the customer’s need?

• Perceived value– How valuable is it?

51

Emotional Vs. Rational Branding

• A brand is an emotional shortcut between the company and its consumer.– Works well on one way channels– Problematic on the internet

• Not absorbing passively• Busy people • Quickly click away from emotional appeals

• Rational Branding more effective– Goods given in exchange of viewing adverts

52

Brand leveraging strategies

• When a company extends its dominant position to other products

• Yahoo!– Directory to Search Engine to Businesses, etc.– Acquired GeoCities– Acquired Broadcast.com– Entered into a network with Fox Entertainment

• These new features attract web users thus increasing advertisement value

53

54

Brand Consolidation 1

• A step further than Brand Leveraging

• Twins two or more companies together

55

Brand Consolidation 2

Home | Planning Tools | Ideas & Advice | Wedding Gowns | Local Wedding Vendors | Wedding Registry Center | Wedding Gift Store | Community | Wedding Websites I 

Privacy PolicyTerms of Use | Newsletters | Advertise With Us | Company Info | Survey | 

Guest Home | Order Status | CelebrityWeddingBuzz.com | MyDIYWeddingDay.com | TheKnot.com TheNest.com| ShopforWeddings.com | WeddingTracker.com | TheBump.com | LilaGuide.com | Weddings.com | Weddingbook | Mommyhood | BreastFe

eding.com | LilaGuide.com|PartySpot.com© 1997-2009 WeddingChannel.com | HELP | Couples

Directory | Site Map

56

Cost of Branding

• Creating a new brand is hard• Easier to

– Transfer an existing brand– Maintain it

• In 1998– Top 100 e-commerce sites spent $8 million to create

an online brand– Amazon spent $133– BarnesAndNoble spent $70– Most of the costs went to TV, Radio, Print

57

Exercise

• Think about your local bank.

• Write 10 point on how it transferred its brand image to the internet?

58

Affiliate marketing strategies

• Company A includes details of Company’s B– Or its products– Company A will receive a commission of whoever

buys from company B through its site

– Amazon.com– Toys R US

– Research shows that click-through rates are much higher in these alliances

59

Viral Marketing

• Uses satisfied customers to tell potential other customers

• Similar to affiliate marketing where they use other websites, here they use other people

• Called viral because it reaches potential customers like a virus

60

Positioning

• Search Engines

• Directories

• Viral Marketing

• Etc

61

62

Search Engines

• A search engine is a special kind of Web page software that finds other Web pages that match a word or phrase you entered

• A Web directory is a listing of hyperlinks to Web pages that is organized into hierarchical categories Eg: http://directory.google.com/

• Search engines contain three major parts: spider, index, and utility

63

Popular Search Engines

64

Spiders and Crawlers

65

Indexing

Paying search engines

66

Website naming issues

• URL must reflect the brand name

• Delta Air Lines– www.delta-air.com– www.delta.com

• Southwest Airlines– www.iflyswa.com– www.southwest.com

• Very common for companies to buy several URLS, even some misspelled ones!– Try yahow.com

67

Questions?

68